Question

Current Attempt in Progress Is merchandise on April 1, 2017 to Red River Enterprises in return for a 12 month, 11%, $14,400 note, with interest due at maturity The company uses a perpetual inventory system and the cost of the inventory sold was $7.920. Oak Ridge has a December 31 year end and adjusts its accounts annually. Prepare the journal entries that Oak Ridge will record with regard to this note from April 1, 2017 until the note matures on March 31. 2018. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit (To record sales) (To record cost of merchandise sold)

Answer 1

Answer:

Date	Account title and Explanation	Debit	Credit
Apr 1,2017	Notes receivable	$14,400
	Sales revenue		$14,400
	[To record sales]
	Cost of goods sold	$7,920
	Merchandise Inventory		$7,920
	[To record cost of merchandise sold
Dec 31,2017	Interest receivable	$1,188
	Interest revenue [14,400 x 11% x 9/12]		$1,188
	[To record accrued interest revenue]
Mar 31,2018	Cash	$15,588
	Interest receivable		$1,188
	Notes receivable		$14,400
	[To record cash received at maturity of the notes]